Zoom Communications, Inc. (ZM) stock intrinsic value fair value estimate & owner earnings analysis

Zoom sells subscriptions to its communications platform (Zoom Meetings, Phone, Contact Center, Team Chat and AI features) to individuals, small businesses and large enterprises. Revenue was $4.87 billion in the year ended January 2026, up about 4% from $4.67 billion, and the first half of fiscal 2027 grew about 5%. Most revenue is prepaid subscriptions, so cash arrives ahead of revenue. How we measured earnings. We start with operating cash flow and remove year-to-year swings in receivables, payables, accruals and deferred revenue. We then deduct stock compensation as a real cost and deduct the part of capital spending needed to maintain the business. Two judgement calls matter. Sales commissions that Zoom capitalizes (about $296 million paid in the latest year) are treated as a genuine recurring cost, not a timing item. Gains on private investments ($970 million last year) are non-cash and excluded. On this basis owner earnings per share were about $3.12 (FY2022), roughly $0 (FY2023), $1.41, $2.32 and $3.62 (FY2026). The FY2021 pandemic surge year ($1.89) is not representative. The earnings level we use is $2.72 per share, the median of FY2022-FY2026 excluding FY2023. FY2023 is set aside because stock compensation peaked at $1.29 billion that year (about 29% of revenue) and has since fallen every year to $761 million, with the first half of fiscal 2027 running about 8% lower again. We do not simply use the latest $3.62 because it is a single strong year that also benefits from roughly $317 million of interest earned on Zoom's large cash and securities balance, income that shrinks as cash is spent on share buybacks ($1.6 billion in the latest year). Actual owner-earnings growth last year was about 56%; we assume none going forward, because we cannot name a dated reason for that pace to continue. Base case: about $30 per share. Owner earnings stay flat at $2.72 for ten years, then fade to zero over the following twenty. Revenue growth of 3-5% is real, but it has come from a market and pricing environment we cannot lock in, and buybacks depend on management choice, so none of it is credited. What is credited is a recurring subscription base with prepaid contracts and a multi-year record of positive owner earnings. Bull case: about $49 per share. Owner earnings start from the latest actual $3.62 (a level already achieved) and grow 3% a year for ten years, below the recent 3-5% revenue growth, then fade to zero over twenty years. This is what happens if stock compensation keeps falling as it has for three straight years and revenue keeps growing at its demonstrated pace. Bear case: about $13 per share. Owner earnings return to the FY2024 level of $1.41, flat for ten years and then fading to zero over ten. The risks named are that stock compensation has already been shown to consume nearly all cash earnings (FY2023), interest income on cash is already declining ($340 million to $317 million), and that Zoom competes with much larger platform vendors, which its own filings identify as a risk to pricing. What we left out. Zoom holds several billion dollars of cash and marketable securities and stakes in private companies. We do not add these separately: the interest on cash is already inside owner earnings, and the private stakes are unrealized, so no value is added for them. Zoom has no meaningful debt. Some engineering staff are located in China, which is worth knowing but not central to the value. What would make this wrong: if stock compensation stays near $760 million while revenue keeps growing, the base case is too low; if competition forces price cuts or stock compensation rises again, the bear case becomes more likely.